Category Archives: Surety Bonds

There is a hidden risk facing small businesses across the country that often goes unnoticed until it suddenly rips through a firm’s finances: employee theft. It’s a crime that is costing U.S. businesses $50 billion annually, with 7% of annual revenues lost to theft or fraud according to Statistic Brain.

Studies found that U.S. businesses affected by employee theft lost an average of $1.13 million in 2016. Small and midsize businesses were hit disproportionately, representing 68 percent of the cases. Their median loss in 2016 was $289,864.

Despite the alarming levels of embezzlement taking place, it isn’t top of mind for many small-business owners.

When one hears the word “Bonds” it brings to mind an investment. But there are other types of bonds that have nothing to do with investing; they relate to business operations and function similarly to insurance.

Surety Bonds are like insurance. They back up a promise to do something; if the promise is breached, the bond pays off to complete the promise.

One common Surety Bond type is a Fidelity Bond (or Crime Bond). Fidelity bonds provide insurance against loss from employee misconduct, such as theft or embezzlement, which is not otherwise covered by a company’s regular insurance coverage. A bond can provide blanket coverage for the actions of all employees or can be tailored to cover one or more specific employees.

When safeguards like thorough employee screening and careful supervision aren’t enough, fidelity bond coverage to protect against employee theft is recommended. If one or more of your employees are entrusted to handle cash or other valuable assets, a Fidelity Bond can protect your business.

Coverage can include:

Employee theft – Stealing merchandise.

Forgery or Alteration – Checks, gift cards etc.

Theft of Money and Securities – Registers etc.

Robbery of safe, burglary of other property, stones, bullion, etc.

Computer fraud, funds transfer, diverting funds to personal accounts.

Money orders and counterfeit money.

Theft from third parties, on loan, deliveries, on customer’s premises.

The cost of Fidelity Bonds: There is no fixed rate for bonds. There are many factors that impact cost, such as the extent of coverage, whether there is a deductible (if allowed), and the surety company that issues the bond. As a rule of thumb, a fidelity bond can cost about ½% to 1% of the coverage obtained.

Surety and fidelity bonds are a risk management tool, it is helpful to discuss your business requirements with an experienced, trusted agent like BFBond/Bernard Fleischer & Sons Inc. We can advise you what coverage is best for your business when traditional insurance doesn’t provide the protection you want or require.

Bid Bond:

A type of contract surety bond that
ensures a bidder for a supply or construction
contract will enter into the contract within the
stipulated timeframe if the company wins the bid.
Default results in the obligee (a government
agency, in this case) receiving the difference
between the amount of the principal’s bid and
the bid of the next low bidder or company
who qualifies for the contract, or the amount
of the bond.

Commercial Surety:

A type of surety bond that
can be required by state and local regulators in
a wide variety of situations to protect consumers
and taxpayers. Some of the most significant for
government policymakers include: license and
permit bonds, reclamation bonds, mortgage
broker bonds and subdivision bonds.

Contract Surety:

Surety bonds that involve
construction projects. In the event a contractor
defaults, contract surety bonds ensure funds
are available to complete the contract and pay
subcontractors, suppliers and laborers.

Fidelity Bond:

A bond a business seeks to
protect itself in the event of a loss incurred
because of employee dishonesty or misconduct.
Some states require these bonds for businesses,
such as title insurance companies and credit
unions, that do business with consumers.

License and Permit Bonds:

Statutes and
regulations require these bonds if a company
seeks to obtain a license or permit in a state
or local jurisdiction. If a principal violates its
obligations, this bond pays the obligee or
other third party.

Miller Act:

Law passed in 1935 that requires
performance and payment bonds for federal
construction projects over a designated
amount, currently for contracts over $150,000.

Money Transmitter Bond:

A surety bond that
guarantees money transmission companies
offer services in compliance with state or local
statutes and regulations.

Mortgage Bond:

A type of commercial surety
required by a state or local regulatory agency
for mortgage brokers to become licensed in
that state.

Obligee:

The entity that requires the bond
and is protected if there is a loss or default.

Payment Bond:

A bond given by a contractor
to guarantee payment to subcontractors,
laborers and suppliers for work performed
under the contract.

Performance Bond:

A bond that guarantees
performance of the terms of a written contract.

Premium:

Required by a surety company
from the principal for the issuance of a bond.
Performance and payment bonds come with
a one-time premium that typically equals up
to 2 percent of the contract price.

Principal:

Also called “obligor.” This is the
party who seeks the bond and is bound by the
underlying obligation.
Reclamation Bond: Required by a state
regulatory agency, such as the Department
of Environmental Quality, for a business that
seeks to mine or perform related activities on
public lands. These bonds provide a financial
guarantee that the public lands mined will
be restored.

Subcontractor Bond:

A bond that a general
contractor may require of a subcontractor,
which guarantees the subcontractor will
perform work in accordance with the terms of
the contract and will pay for certain labor and
materials under the contract.

Subdivision Bond:

Developers must get this
bond from a surety if they plan to develop a
plot in a municipality to sell lots or homes.
Local development authorities require
these bonds, which guarantee a developer’s
obligation that the project will adhere to state
and local statutes and regulations, before they
issue a development permit.

Surety:

Third party that issues the bond to the
principal and is responsible for fulfilling the
claim in the event of a default or loss.

Surety Bonds:

A written agreement where a
surety obligates itself to a second party, called
the obligee, to answer for the default of the
principal. In the case of public works contracts,
the obligee would be the state agency and the
principal would be the contractor.

Many surety bonds are issued on a fixed term but there are some bonds with specific expiration dates set by the obligee, so it is important that you’re aware of when you are required to renew your bond. There are many bonds that expire on December 31st every year so to avoid a lapse in coverage and potential punitive action make sure to check your bond type and its expiration date.

It is highly encouraged that all surety bond renewals are done before the current term has ended. That way, there is considerably less chance of any issues that could result in a lapse of coverage. Keep in mind that by waiting until the last minute, if there is a lapse in coverage due to the principal’s failure to renew on time the principal may find themselves without the bond coverage necessary, which may result in penalties.

This is especially true for renewals due at the end of the year during the holiday season, when many local government and state offices have more limited hours of operation. We offer surety bonds in all 50 States with a quick and convenient application process to avoid delays. For further information on our surety bond products visit us at bfbond.com, call us at 800.921.1008 or get an application here.

Strange way of stealing Gold from the Royal Canadian Mint.

Via the Anus!

The case against Leston Lawrence, 35, in an Ottawa courtroom presided over by Justice Peter Doody on a number of smuggling-for-cash charges may seem like a joke, but the risk of employee dishonesty is all too real. Mr. Lawrence is accused of theft, laundering the proceeds of crime, possession of stolen property, breach of trust and he was fired from the Mint. Would a Fidelity Crime Bond cover this?

During testimony it was revealed that Mr. Lawrence set off the metal detectors more often than the other employees (Except for the ones with medical implants), requiring manual scans using a metal detecting wand but they never seemed to find anything on him. Investigators say that he used Vaseline and rubber gloves that they found in his work locker to aid in smuggling the cookie sized pucks of gold.

Four of the pucks were found in a safe deposit box owned by Lawrence and he had sold 18 of them for approximately $6,800 each from November 2014 to March 2015. Subsequently, an obviously dedicated security employee tested the idea that the pucks could be concealed in an anal cavity and not be detected by the wand.

Curiously, the mint never noticed any gold missing. After a bank teller noticed Mr. Lawrence had been cashing several checks from a gold dealer and then transferring the money out of the country is when the teller looked up the man’s place of work and alerted the mint to the suspicious activity.

Jaw dropping statistics from the ‘Statistic Brain’ website, trusted research provider for Forbes, CNN, ABC News, and many others reveals that the amount stolen annually from U.S. businesses by employees is $50,000,000,000 and 7% of annual revenues are lost to employee dishonesty and fraud.

Although a minority of employees becomes dishonest, they can rationalize their theft in many ways: ‘the company won’t miss it,’ ‘they’re not paying me enough,’ or the person succumbs to gambling or some other addiction. Protecting a business with a Fiduciary bond aka Crime bond or Fidelity bond is the most effective way of preventing these losses. The definition on a Travelers Insurance policy for Employee Theft reads

“The Company will pay the Insured for the Insured’s direct loss of, or direct loss from damage to
Money, Securities and Other Property directly caused by Theft or Forgery committed by an
Employee, whether identified or not, acting alone or in collusion with other persons”

In addition to the employer being protected from covered losses due to theft and forgery, the exact definition of “who” is covered is defined in the policy, but should include all current or former employees, partners, members, directors, volunteers, trustees, seasonal employees and temporary employees. If the mint had one of these bond policies they would be insured against the conservatively estimated $180,000.00 loss.

Some of the typical exclusions to these policies are accounting or math errors, vandalism, Governmental action, restatement of a profit and loss statement and theft by the employer itself. You cannot steal from yourself; however coverage extends to partners, directors, members, and trustees.

Ever watch HGTV (Home & Garden Television) and witness the horror stories left behind by shady contractors? Things like homeowners without kitchens or baths for months. Police recently arrested 45-year-old Cary Grimm on charges of grand theft for doing just that. Customers say the contractor disappeared without completing the work that was he was contracted for.

One couple said their home remodeling project turned into a nightmare after a few weeks’ delay turned into a half a year battle. The complaints which total nearly $90,000 based on over a dozen complaints by customers that came in after Grimm exhibited at a local home show. How could a surety bond aka performance Bond have helped? These bonds ensure a contractor will perform work required in a contract or winning bid.

Bonds provide small contractors and customers with numerous benefits. The surety bond is a form of protection against contractor default due to faulty workmanship, late delivery or not using specified materials. The surety company helps the contractor avoid costly delays and contract disputes if the sub-contract defaults with their portion of the job by non-performance. Then the surety company will intervene to fulfill the contractor’s scope of work. When a project is bonded, there’s also an added layer of payment protection for workers and suppliers of the contractor.

Surety bonds help level the playing field, and allow a small contractor to compete in the free market, leading to lucrative contracting opportunities. Consumers and businesses feel more secure when hiring a bonded contractor. A contractor’s bond and insurance are important forms of protection for anyone who is taking on a construction project.

Furthermore; to avoid a Mechanics Lien, a Payment bond is suggested. Using this Surety Bond as a tool, gives owners assurance that all suppliers and sub-contractors are paid. Also suggested is an Ancillary bond to guarantee that non-material or performance requirements of a contract will be met. An example would be compliance with special terms, laws or regulations.

An Indianapolis woman will learn her fate after admitting to six counts of wire fraud and money laundering in a $5.5 million embezzlement scheme.

No longer a swing state (The state typically votes Republican with an exception in 2008) Hoosiers will head to the polls as Kristi Espiritu will be headed to sentencing in U.S. District Court at 10 a.m. on Nov. 8. She worked at Network Storage Inc., a data storage company based in Indianapolis, from 2008 to 2014 as a bookkeeper.

Court records show that with access to the company’s bank accounts she used their money to pay for shopping trips to purchase luxury items such as diamonds, handbags, electronics, furnishings and travel. A common occurrence in employee theft losses. According to a plea agreement reached back in May she admitted to lying to company executives and falsifying books and payroll systems. Even the best managers, can be over trusting and never spot check or have a system to verify the monies in their bank account to avoid crimes like this.

As a part of a plea deal she agreed to pay $5.5 million in restitution, if she can’t pay that amount before sentencing, federal officials will use asset forfeiture to recover the funds. If the company purchased a dishonesty bond to cover this crime, they would become whole and not be concerned if the employee had the monies to repay the theft.

Espiritu could face up to 20 years in prison and a $250,000 fine on four wire fraud charges, and 10 years in prison and a $250,000 fine on two money laundering charges. White collar criminals steal through position and influence and quite often get away with their crimes for many years before getting caught.

It is unsure whether Network Storage Inc. had a fidelity bond (aka Crime Bond, Dishonesty Bond) which is a form of insurance protection that covers losses incurred as a result of fraudulent acts by specified individuals, usually insuring a business for losses caused by dishonest acts of its employees. Learn how fidelity bonds and surety bonds from BF Bond provide your growing business with the protection you require. Visit us at BFBond.com to fill out an application or call us at 800.921.1008

Prince Rogers Nelson, the legendary American singer-songwriter, multi-instrumentalist and record producer died unexpectedly on April 21st 2016. He was married twice and has no known surviving children. Prince’s sister and only full sibling Tyka Nelson filed court documents in Carver County, to open a probate case, stating that no will had been found. Prince’s five half-siblings also have a claim to his estate. As of three weeks after his death, 700 people claimed to be half-siblings or descendants!

As for Prince, it’s hard understand, why he never created a will or a full estate plan, especially given his wealth and complicated asset structures. On April 26, 2016, Bremer Trust was given temporary control of his estate without bond; this is very unusual considering the importance of having a probate bond. probate bonds, keeps everyone honest. It is designed to protect the deceased’s assets from being misappropriated or stolen by the executor. Theft is not limited to just writing checks to erroneous people, but selling property at deep discounts to friends or shady business partners or making sweetheart business arrangements with possible payoffs or kickbacks. All monies in the estate are to be used to settle the estate, pay taxes and anything left over goes to the rightful heirs, if the executor has done wrong, the bonding company will make the estate whole and then prosecute the executor.

The court can fine or remove an administrator (or executor) for failure to perform the duties faithfully. The administrator (or executor) in most cases must post a bond (paid from the decedent’s estate) to cover potential losses that the estate might suffer through error or mishandling of property during the administration process. Why the court did not require the probate bond, is a question for further investigation.
We provide different types of Surety bonds, Probate Bonds, License bonds, Fidelity bonds, Guardian Bonds , Fiduciary Bonds, and are licensed with Treasury listed companies in all 50 states. Visit us to learn more or call 1-800-921-1008 to speak with a customer service professional.

In a Civil Case when an appeal bond is required by the judge, the principle has the option of getting a surety bond or depositing cash in the amount of the bond with the court. Does it make sense to obtain a surety bond or does it make sense to deposit money with the court? And if you do deposit with the court, how long before you get your money back?

Benefits of Posting a bond:

The benefit of posting an appeal bond is that the bonding company has options to take collateral in form of cash or brokerage account or Letter of Credit, in some incidents if your credit is strong enough, no collateral is required, these options gives you the ability to leverage your money. Of course if your credit is poor, then the collateral options are limited

If successful in winning the appeal, the funds are returned to you very quick.

Cons of depositing money with the court:

The courts only accept cash.

Takes months before the paperwork is processed.

Access to capital is lost

Real Scenario:

A client mentioned that he could not meet his financial obligations due to the fact that he had a $400,000 deposit held with the court and they are taking over 6o days to release his funds..

At BF Bond our customer service professionals can address our client’s diverse need which often requires finding creative solutions to these problems. Retrieving deposits from the courts can be a long and arduous process. When faced with a decision like this that may cost you time and money, contact us and we can help make a difficult process much easier.

The Public Adjuster Bond guarantees that you will comply with State laws and statutes and conduct business in accordance with all rules and regulations.

The Public Adjuster Bond is a license and permit surety bond that protects the policyholder for whom the adjuster rendered services from fraud, dishonesty, misstatement, misrepresentation, deceit and or any unlawful acts as they investigate the claim and issue their settlement recommendations.

You are required to obtain a surety bond to protect your clients. If you do not follow state regulations, a claim can be filed on your bond.

Why doyou needaPublic Adjuster Bond?

In the required States, any individual or business entity who aids an insured in negotiating the settlement of claims for loss or damage under an insurance policy or who advertises or solicits business as a public insurance adjuster is required to be licensed as a public insurance adjuster and obtain a surety bond to be in compliance with the state Statutes.

How long does the Public Adjuster Surety Bond last?

Each state has different year terms, 1 or 2 years, which means the bond will remain in effect until expiration date.

In today ‘s complex society, more and more people are engaging in litigation, which creates an increased need for the various bonds required in many cases.
BFBOND.com assures prompt service, not only in providing these judicial bonds locally, but also for those which a lawyer or one of his clients may be re­quired to file in some other part of the country. We make our bonds and ser­vices available in all parts of the nation either directly working with the clients or through thousands of independent in­surance agents and brokers. And, to assure these representatives and their clients effective action when coverages are needed or losses sustained, Bernard Fleischer & Sons, Inc maintains an expertly-staffed sales, underwriting and claim office.
Since 1949, Bernard Fleischer & Sons, BFBOND.com has been one of America’s pioneer bonding companies. We work with company ‘s ap­proved as surety on bonds required by the Federal government. Bernard Fleischer & Sons, BFBOND.com consistently occupies a front-rank position in the surety field.
Our commitment to sound under­ writing principles enables us to pro­vide a stable source of expert bonding service. At Bernard Fleischer & Sons, Inc, we believe that the proper handling of many forms of surety bonds requires technical knowledge that can be acquired only by a concentrated study of the subject combined with years of practical experience in the application of such knowledge.
Attorneys have come to depend on Bernard Fleischer & Sons, Inc experience and unparalleled service in meeting the special bonding requirements of the legal profession, such as:• Administrator’s/Executor’ sf Personal Representative’s Bonds• Guardian/ Conservators/ Committee Bonds• Testamentary Trustees Bonds• Receivers Bonds• Trustee in Liquidation Bonds• Trustee in Reorganization Bonds• Attachment/Garnishment Bonds• Replevin Bonds• Injunction Bonds• Indemnity to Sheriff• Counter-Replevin Bonds• Appeal, Supersedeas, Stay of Execu­tion Bonds• Release Attachment/Discharge Garnishment Bonds• Dissolve Injunction Bonds
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